February 22, 2019
Business

Milo rail yard finds new life in evolving industry

MILO – Next stop, Poland!

On a gray November day, the Montreal, Maine & Atlantic Railway yard in Derby – a tiny community in the town of Milo – might seem like it’s remote enough to be at the end of the track. But for the gleaming, like-new parts of Locomotive Kit 19, Derby is just the beginning. The locomotive is being completely rebuilt by the hardworking crew here. When it’s finished, it will be shipped to Rail Polska in Poland.

“When you see something go out of the shop that your people have worked on and fixed and made successful, that’s very fulfilling,” said Tom Tancula, vice president of mechanical operations for Rail World Inc., the lead investor of MM&A. “There are creative and knowledgeable people up here. There are very few things they can’t do.”

In what’s a growing part of the railway’s business, secondhand Amtrak locomotives rebuilt in Maine are now cruising the rails of Panama and Estonia, as well as Poland. The company is angling to rebuild locomotives for Dallas Area Rapid Transit in Texas and has a contract to repair railcars for Dragon Cement of Portland. This kind of skilled rebuilding and repair work is the opposite of outsourcing – and rail officials hope that by shipping out more and more refurbished engines and other parts, they can prepare for the future.

Ideally, the work will cushion the blow of the continuing hardships faced by Maine’s paper industry, which generates the bulk of work for the state’s railroads.

“Our overseas venture is working quite well,” Ed Burkhardt, president of Rail World Inc., said in a telephone interview Thursday from his Chicago headquarters. Rail World also owns Rail Polska.

According to MMA officials, a brand-new locomotive costs about $2 million in the U.S. and $3 million to $3.5 million in Europe. A good secondhand Amtrak locomotive can cost $130,000, so the business of rebuilding and selling them can be lucrative.

“We put the heat on the shops to try to get more of this outside work,” Burkhardt said. “That’s a good potential for us and mitigates the weakness in the Maine economy. We’re in a very dynamic business. As the economy changes, we have to change with it.”

Switching course

This isn’t the first time that Maine railroads have had to switch course. The Bangor and Aroostook Railroad was incorporated in 1891, combining the Bangor and Piscataquis and Bangor and Katahdin railroads. By 1905, the railroad reached to the deepwater port in Searsport, and by the 1930s it was firmly ensconced in the business of hauling Maine’s hallmark product – potatoes. Over the years, the railroad hauled fewer potatoes and people and more pulp and paper, which is now MMA’s primary source of traffic.

When Burkhardt’s company and other investors bought the bankrupt, 750-mile-long Bangor and Aroostook in January 2003, there were only four or five workers at the rail yard in Derby. Although the shop was operating at a “very, very low level,” Burkhardt said, he and other investors saw it as an asset for the newly created Montreal, Maine & Atlantic Railway.

MMA was sorely in need of assets because the acquisition went through just hours before Great Northern Paper in Millinocket and East Millinocket filed for bankruptcy. Great Northern had provided 25 percent of MMA’s revenue and the company’sclosure was a blow for the new railroad. Although Katahdin Paper Co., owned by Brascan Corp., restarted paper production the following year, it has been a turbulent decade for Maine’s paper industry and the railroad that serves it.

“We have been hurt terribly by the closing of the mills. We hauled the wood, we delivered it, we took it away,” said Stephen Greene, the vice president for the railroad’s mechanical department.

Despite the difficult beginning, the potential in the Derby yard was undeniable and the new company boosted its work force there to about 35 skilled employees. They’re kept busy in the blacksmith and machine shops, where they repair the outsized components that make up the locomotives. The workers at the Derby yard are responsible for maintenance of all of the railroad’s locomotives, too, and the cavernous shop buildings of the yard are cheerful with their freshly painted red and yellow engines. A gutted Amtrak locomotive parked outside looks a bit lonely.

Greene said the increased rebuilding business at the Derby rail yard should be a boon to Maine.

“This may be what saves our business here, as far as the locomotive and car rebuild portion of our business goes,” he said. “The recession has hurt our business terribly and we are looking for any business that we can.”

The Enron collapse

In some ways, the locomotive refurbishing business is all thanks to Enron. That’s because during the dim days of California’s 2001 rolling blackouts, Burkhardt bought secondhand locomotives with the idea of making them standby power generators.

“When Enron collapsed, the energy crisis went away. The market went away,” Tancula said.

So in 2003 Rail World sent those secondhand Amtrak locomotives to the Derby shop – just as Rail World’s Eastern European investments were having trouble with what Tancula called “the crappy, junky … Soviet locomotives.”

The Soviet engines were “very maintenance-intense machines,” he said, and the Americans figured that their General Electric locomotives could do the work better.

When the first rebuilt locomotive was unloaded in Estonia, workers played Bruce Springsteen’s anthem “Born in the U.S.A.,” he remembered.

Even years after the fact, Tancula was still grinning over the memory.

The effort of rebuilding and shipping these locomotives so far away is worth it, Burkhardt said.

“I’m positive we have the best diesel locomotives in Poland and in other countries as well. We’ve got a good, solid prospect of selling some of these locomotives to others,” he said. “We’re looking to sell to Lithuania, and we’re talking to others in Poland.”

Rebuilding the locomotives for the changing specifications of different countries and systems takes a lot of versatility, MM&A officials said, and that is one thing that the Derby shop workers excel at.

“We can do almost anything here,” said Steve Johnston, the locomotives manager at the Derby shop. “We’ve got a very highly skilled and conscientious work force here. This is a profit center.”

Workers find themselves rebuilding a lot of the different components and also contract out some work to local companies such as AC Electric’s shop in Bangor.

Rebuilding a locomotive for the Rail Polska contract takes about a month, and so far the yard crew has completed 18 of them.

As this part of the business grows, Burkhardt hopes to expand the yard’s capacity by getting more machinery and hiring more people.

“The employee group there is excellent. They have very good mechanical and electrical skills,” Burkhardt said. “It’s nice to find a good supply of people who can do that kind of work – and it’s our job to find things for them to do to keep them busy.”

acurtis@bangordailynews.net

990-8133


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